The Republic of the Philippines v The People’s Republic of China: A question of jurisdiction

The dispute in the South China Sea continues to be played out on the global stage with no resolution yet in sight. Tensions endure as the Philippines pursues its quest for arbitral resolution, whilst China continues to stake its claims in the area despite the ongoing litigation. Satellite photographs have been released in recent months of Chinese barges enlarging the size of reefs and islands, and the building of airstrips and harbours to accommodate jets and warships. This demonstrates China’s determination to assert its ownership of virtually the entire South China Sea.

Image Credit: www.smh.com.au

[Image Credit: http://www.smh.com.au ]

The Philippines has challenged the basis of China’s territorial claims by way of arbitral proceedings, and lodged a Memorial in March 2014. The Arbitral Tribunal (for which the Permanent Court of Arbitration acts as a Registry) fixed 15 December 2014 as the date for China to submit a Counter-Memorial in response, however no such document has been forthcoming. The Chinese Government has previously stated in a Note Verbale that it will ‘neither accept nor participate in the arbitration unilaterally initiated by the Philippines.’  Article 287(3) of the United Nations Convention on the Law of the Sea 1982 (LOSC), which both States are party to, requires States to select a preferred means of binding dispute resolution involving third parties, and if they fail to do so, arbitration under Annex VII becomes the default means – unless reservations have been made in writing with regard to optional exceptions (see below). As China and the Philippines have not agreed on a binding mechanism, they are deemed to have selected arbitration unless the aforementioned exceptions apply. Article 9 of that Annex provides for default of appearance; namely if one of the parties fails to appear before the arbitral tribunal, the other party may request that the tribunal continue its proceedings and make an award. This may well be the approach of the Tribunal in this case, as China refuses to participate.

The Arbitral Tribunal also has its own Rules of Procedure. Article 25(2) states that if a party does not appear, the Tribunal shall invite written arguments from the appearing Party on specific issues which the Tribunal considers have not been (or inadequately) canvassed, in the pleading submitted by the appearing Party. In line with this, the appearing Party shall make a Supplemental Written Submission in relation to the matters identified by the Tribunal within three months of the invitation. The Philippines was invited to address any public statements made by the Chinese Government in relation to the dispute and had until 15 March 2015 to file such a Submission. The Philippines’ Supplemental Submission comprised 3,000 pages which focused on rebutting China’s claim that the Tribunal does not have jurisdiction to hear the dispute. The Philippines is confident that its answers to the Tribunal’s questions leave no doubt that the Tribunal has jurisdiction over the case, and that claims are well founded in fact and law, states the Department of Foreign Affairs. China has until 16 June 2015 to respond.

On 22 April 2015, the Tribunal issued its fourth Procedural Order on its decision to conduct a hearing in July 2015 on the matter of the Tribunal’s jurisdiction. Under Article 9 LOSC, the Arbitral Tribunal must satisfy itself not only that it has jurisdiction over the dispute but also that the claim is well founded in fact and law. Article 20 of the Rules of Procedure provides that the Tribunal has the power to rule on objections to its jurisdiction or to the admissibility of any claim made in the proceedings, and that a plea that the Tribunal does not have jurisdiction shall be raised no later than in the Counter-Memorial. The Tribunal has decided to treat China’s communications as constituting such a plea, including a ‘Position Paper of the Government of the People’s Republic of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the Republic of the Philippines’ published by China on 7 December 2014 (despite not being an official document submitted to the Tribunal). The aim of the Paper is to demonstrate that the Tribunal does not have jurisdiction over the case, and outlines three main positions on procedural and substantive grounds as such.

Firstly, the Position Paper considers the subject of the arbitration to be the territorial sovereignty over maritime features in the South China Sea, which is beyond the scope of the LOSC and does not concern the interpretation or application of the Convention. Article 279 LOSC is clear that State Parties shall settle any dispute concerning the interpretation or application of the Convention by peaceful means. The Tribunal should address whether this matter does concern the interpretation or application of the LOSC, and what the exact subject matter of the case is.

Secondly is the issue that China and the Philippines have agreed, through bilateral instruments and the Declaration on the Conduct of Parties in the South China Sea, to settle their relevant disputes through negotiations. China views that by unilaterally initiating the arbitration, the Philippines has breached its obligation under international law. Article 4 of the Declaration stipulates that Parties should undertake to resolve their territorial and jurisdictional disputes by peaceful means, without resorting to the threat or use of force, through friendly consultations and negotiations by sovereign States directly concerned in accordance with universally recognised principles of international law and the LOSC 1982. However, Article 280 LOSC provides that Parties have the right to agree at any time to settle a dispute between them by any peaceful means of their own choice, and procedures are provided for in Part XI where no settlement has been reached by the parties.

It is fair to say that there are numerous – soft law – instruments in place (listed in the Position Paper) between the Philippines and China in relation to the resolution of disputes, stating that they should be resolved through diplomatic means. But surely there must be a mechanism for the ultimate peaceful resolution of disputes when such negotiations break down, or are unfruitful? It is provided in the LOSC that State Parties should settle disputes by any peaceful means, however cases such as the Southern Bluefin Tuna Cases (1999) have shown that it is not mandatory to resolve disputes by diplomatic means in the first instance. The International Tribunal on the Law of the Sea (ITLOS) held in that case, that a State Party is not obliged to pursue procedures under Part XV, Section 1 LOSC when it concludes that the possibilities of settlement have been exhausted. Similarly, in the MOX Plant Case (2001), ITLOS held that a State Party is not obliged to continue with an exchange of views regarding settlement when it concludes that the possibility of reaching agreement have been exhausted. The Philippines stated in its Notification and Statement of Claim for the tribunal that all claims have been the subject of good faith negotiations between the Parties, and there have been numerous exchanges of views. It could also be argued by the Philippines that it viewed diplomatic avenues of settlement to be exhausted and so opted to exercise provisions within the LOSC for judicial settlement.

The Philippines may also choose to highlight that Article 5 of the Declaration stipulates that Parties should undertake to exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability including, among others, refraining from action of inhabiting on the presently uninhabited islands, reefs, shoals, cays and other features and to handle their differences in a constructive manner. If China wishes to illustrate that the provisions within the Declaration have been breached by the Philippines, perhaps it would do well to abide by these provisions itself. The Association of South-East Asian Nations (ASEAN), the forum in which the Declaration was drafted, stated in its annual summit in April 2015 that the land reclamation being undertaken in the South China Sea had ‘eroded trust and confidence’ in the South China Sea and threatened to ‘undermine peace, security and stability.’ It is clear that other nations and organisations are also becoming increasingly concerned about the activity in the area. ASEAN also emphasised the need for all parties to ensure the full and effective implementation of the Declaration in its entirety: to build, maintain and enhance mutual trust and confidence; exercising self-restraint in the conduct of activities; to not to resort to threat or use of force; and for the parties concerned to resolve their differences and disputes through peaceful means, in accordance with international law including the LOSC 1982. It appears that the Philippines is doing just that.

Finally, China argues that even if the Tribunal viewed the subject matter of the arbitration as being concerned with the interpretation or application of the Convention, the subject matter forms an integral part of maritime delimitation between the two countries. A declaration was filed by China in 2006 which attempts to exclude disputes concerning maritime delimitation from compulsory arbitration and compulsory dispute activities. Such a declaration is permitted under Article 298 LOSC, which provides that States may, without prejudice to the obligations arising under Section 1 (general provisions), declare in writing that it does not accept any one of more of the procedures provided for in Section 2 (compulsory procedures) with respect to disputes concerning the interpretation or application of articles 15, 74 and 83 relating to sea boundary delimitations; disputes concerning military activities; and disputes in respect of which the Security Council of the UN is exercising the functions assigned to it by the Charter of the UN. This declaration could be difficult for the Philippines to circumvent if the Tribunal views the subject matter to be a delimitation issue.

Nevertheless, similarities can be drawn with the recent case of The Arctic Sunrise Case (Kingdom of the Netherlands v Russian Federation), Provisional Measures in ITLOS. Russia refused to take part in the arbitration and argued that ITLOS did not have the jurisdiction to hear the case as Russia reserves, inter alia, disputes concerning law-enforcement activities in regard to the exercise of sovereign rights or jurisdiction from compulsory settlement pursuant to Article 298 LOSC. However, where Article 298(1)(b) states that parties may exclude disputes concerning military activities, it also provides that this is in respect of Article 297(2) and (3), which apply to marine scientific research and fisheries, not freedom of navigation as was the issue in this case. Article 310 LOSC is quite clear that parties cannot issue statements that modify the terms of the LOSC, and so this statement fell outside the scope of the reservation and exclusions. As in The Arctic Sunrise Case, the Tribunal may decide that the subject matter of the arbitration falls outside the scope of China’s declaration. The Philippines argues that it is simply asking whether the ‘nine-dash line’ has any legal basis and whether certain contested features are rocks or low-tide elevations. It acknowledges that territorial sovereignty of those features are not within the Tribunal’s jurisdiction and therefore does not seek a ruling on this, or on the delimitation of any maritime boundaries. China argues that these claims cannot be decided without first undertaking maritime delimitation, to which its reservation applies.

It will be interesting to see whether the strict approaches taken by the panel in The Arctic Sunrise Case will be followed in this case, and whether the Tribunal will opt to view the subject matter of the arbitration as falling beyond the non-appearing Party’s reservation. It seems that non-participation in such proceedings is quite rare in international dispute resolution, and clearly the panel in the Arctic Sunrise took a harsh approach to Russia’s non-appearance – almost bordering on punitive. Its decision could serve a stern warning to those States who refuse to participate in future proceedings, perhaps establishing an uncomfortable precedent for a respondent State to be obliged to appear in proceedings in order to benefit from settled precedent. The actions of the Tribunal in the present case will be intriguing in this respect.

It seems unlikely at this stage that China will respond to the Supplemental Written Submission, and so it has become a waiting game to see whether the Tribunal believes it has the appropriate jurisdiction over the case. Vietnam submitted a confidential statement to the Tribunal (which has not been made available to the public) in December 2014, which supports the Philippines’ arguments and recognises the Tribunal’s jurisdiction. It remains to be seen whether such shows of support will make a difference. Oral arguments are expected to be made in July, with the issuance of an Award in early 2016.

A more detailed account of events in the South China Sea up to December 2014 can be found in H. Roberts, ‘Responses to Sovereign Disputes in the South China Sea’ (2015) 30 IJMCL 199

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